For the Next Two Weeks, Only Small Businesses Can Apply for PPP Funds
The Biden administration has also expanded the list of those eligible for assistance including independent contractors and non-citizens.
On Monday, President Joe Biden announced several reforms to the latest round of Paycheck Protection Program (PPP) funding, which the administration hopes will allow small businesses to receive pandemic-related economic relief.
One of the biggest changes is that, for a 14-day period starting on Wednesday, only businesses—including restaurants—that have fewer than 20 employees can apply for relief through the program. In a statement, the administration said that, although 98 percent of small businesses fall into this category, they "often struggle more than larger businesses" when it comes to collecting and submitting the required paperwork that lenders require.
"Maybe it's the pizza place you used to take your family to dinner," Biden said on Monday. "It's the mom-and-pop shop that is supported by the community that, in turn, they go and support the community. They sponsor little league teams. These small businesses, not the ones with 500 employees, they are 90 percent of the businesses in America, but when the PPP was passed a lot of these mom-and-pop businesses got muscled out of the way by bigger companies that jumped in front of the line."
Some of the administration's other PPP-related changes include a revision to the loan calculation formula to provide more beneficial relief to sole proprietors, independent contractors, and the self-employed. During previous rounds of PPP funding, some of those businesses were either excluded from receiving PPP funds, or they were "approved for as little as $1" due to the way that those loans were calculated.
The administration has also pledged to ensure access to the program for non-citizen small business owners who have Green Cards or are in the United States on a visa; although the program has always been available to "all lawful U.S. residents," the Biden administration says that "a lack of guidance from the [Small Business Administration]" has not always made it clear that eligible non-citizen business owners could use their Individual Taxpayer Identification Numbers (ITINs) to apply for assistance.
The latest round of PPP funding opened last month and, as of this writing, 1,918,663 loans have been approved in 2021. Compared to the same time last year (represented by the same number of weeks into the program) the share of relief funds that have gone to businesses with fewer than 10 employees has increased by 60 percent, the share of funding that has gone to small businesses in rural areas has increased by 30 percent, and the share of funds that have been distributed by Community Development Financial Institutions and Minority Depository Institutions has increased by 40 percent.
"While these efforts are no substitute for passage of the American Rescue Plan, they will extend much-needed resources to help small businesses survive, reopen, and rebuild," the administration said.